EnQuest PLC, the largest independent UK oil producer in the North Sea, has secured a brownfield tax allowance to fully exploit its Thistle oilfield.
The next phase in the life extension programme for Thistle, made possible by today’s announcement, will safeguard almost 500 existing North Sea jobs and create almost 1,000 new jobs across the UK oil and gas supply chain in Aberdeen, Newcastle, Manchester and Swansea over the next three years.
EnQuest is among the first oil and gas operators to secure a brownfield tax allowance which is one of a series of measures the Government has put in place to stimulate investment in the North Sea.
Commenting on the announcement, the Economic Secretary to the Treasury, Sajid Javid MP, said: “This is positive news and demonstrates how Government’s package of changes to the oil and gas tax regime, including the introduction of Brownfield allowances, is stimulating billions of pounds of investment, supporting jobs, delivering revenue for taxpayers and helping ensure we make the most of this valuable national asset.”
David Heslop, general manager for EnQuest in Aberdeen, added: “Before EnQuest acquired Thistle in 2010, production was declining and, coupled with ageing infrastructure, it was approaching the point where production may have stopped. As a result of our investment so far, which has included facilities and safety systems upgrades, a major rig reactivation programme and drilling of five new wells, production has significantly increased. With the assistance of the brownfield tax allowance, we are now able to embark on the next phase of Thistle’s late life extension programme, realising reserves of 35 MMboe and extending field life.
“Thistle is a prime example of how we are able to recover more oil from mature assets through a combination of innovative ways of working and technical expertise. It demonstrates what EnQuest does best and underlines our long-term commitment to the North Sea.”
The late life extension programme will see further investment of around £169 million GBP, with contracts for the work being awarded to around 30 companies across the UK supply chain.
The rejuvenated Thistle field has boosted production to levels not seen since the nineties. Following a successful rig reactivation project, completed with an exemplary safety record free of any lost time incidents (LTIs) on drilling operations, EnQuest is now implementing a technology-led work programme which will simplify and streamline processes to create a reliable production environment and include a major power upgrade featuring the installation of a 30MW power generation turbine, a new process control safety system, and wide-ranging topsides integrity work.
Chief executive officer of EnQuest PLC, Amjad Bseisu, said: “In 2012, we welcomed the brownfield announcement from the Treasury in support of investment in mature oilfields. This sent out positive signals about the UK oil industry’s fiscal regime and was particularly positive for EnQuest in terms of executing our long-term strategy of delivering sustainable growth in North Sea oil production. HM Treasury’s approval of our allowance enables us to commit to a new phase of investment, extending the life of the mature Thistle field and gives us the confidence to pursue similar life extension programmes on other assets such as our Heather field. This in turn helps sustain investment in the northern North Sea, safe-guarding and creating jobs, and also sends out a strong message about the long-term future of the oil and gas industry.”
Mike Tholen, Oil & Gas UK’s economics and commercial director, said: “Oil & Gas UK is pleased that the tax change made recently by the Government to promote further new investment in the UK’s existing oil and gas fields continues to deliver real benefits to the national economy. EnQuest’s decision to make fresh investment in the Thistle field will provide hundreds of jobs right across Britain and with extra oil being extracted, UK energy security will be strengthened. Given that oil and gas will still be needed to provide 70 per cent of our energy needs into the 2040s, this announcement reinforces the importance of continued constructive engagement between the industry and Treasury to ensure that the recovery of the UK’s oil and gas resources is maximised in the coming decades.”
February 4, 2013